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Policy Letter

Sign-on letter expressing opposition to reauthorization of the Price-Anderson Act which protects nuclear power and nuclear weapons facilitiy operators from financial liability

Clean Water Action

Friends of the Earth


Natural Resources Defense Council

Nuclear Information and Resource Service

Physicians for Social Responsibility

Project On Government Oversight

Public Citizen

Safe Energy Communication Council

Sierra Club

Taxpayers for Common Sense

U.S. Public Interest Research Group

December 5, 2001

Re: Oppose Price-Anderson Act Reauthorization

Dear Senator,

As national environmental, public interest, taxpayer, and consumer advocacy organizations, we are writing to express our opposition to reauthorization of the Price-Anderson Act. We are particularly concerned that this significant piece of legislation may be rolled into the energy bill and as such not subject to the full legislative process.

The Price-Anderson Act allows nuclear operators to insure commercial reactors at a level far below the calculated cost of a serious accident. This ill-conceived system leaves the public unprotected, power plant owners unaccountable, and taxpayers on the hook for potentially billions of dollars in the event of a nuclear catastrophe.

Moreover, by artificially lowering insurance requirements, the Price-Anderson Act serves as an indirect subsidy for the nuclear industry in terms of foregone insurance premiums. Economic analysts have estimated this subsidy to be worth $3.45 million to $44 million per reactor annually, resulting in a windfall to the nuclear industry of between $366 million and $3.4 billion each year. This unprecedented form of federal intervention distorts competition in wholesale electricity markets in favor of nuclear power while masking its inherent risks. It also significantly mitigates investment risk for corporations developing new nuclear plants, conferring a competitive advantage to the nuclear power industry, relative to other electricity sources.

The Price-Anderson Act was originally enacted in 1957 as a temporary measure to jump-start the nascent nuclear power industry. Forty-four years later the mature industry still balks at retaining insurance for the full potential liability of its proposed new generation of nuclear reactors. If these reactor designs are as safe as the industry claims and do not pose an undue risk to public health and safety, the industry should be able to privately insure them.

We urge you to finally end this subsidy, which in the past benefited only regulated and public utilities. New nuclear power plants would likely be built by unregulated generators in deregulated wholesale electricity markets. The risk posed by nuclear activities should be fully factored into the cost structure of these projects, to be borne by the nuclear industry, not transferred to the public. Taxpayers should not bear any potential liability in the newly deregulated electricity marketplace for the nuclear power industry's profit-based construction decisions.

As you know, the tragic events of September 11, 2001 have raised serious concerns about safety and security at nuclear facilities worldwide. Articles in the New York Times, Washington Post, Los Angeles Times, Newsweek, U.S. News and World Report, and others describe significant security vulnerabilities at U.S. nuclear power plants. Many cannot even meet the current security requirements widely considered to be inadequate: nearly half have failed to repel small groups of intruders on foot in "force-on-force" exercises conducted by the Nuclear Regulatory Commission. Furthermore, the Nuclear Regulatory Commission has recognized that the containment buildings housing nuclear reactors are not designed to withstand an attack of the scale witnessed at the World Trade Center in New York and the Pentagon. Spent nuclear fuel pools at many U.S. nuclear power plants, which can contain more radioactivity than the reactor core itself, are located outside of the containment structure, presenting an even more vulnerable target.

Given current concerns over nuclear plant security, it would be inappropriate for the Senate to facilitate and indirectly subsidize the construction of new reactors by reauthorizing the Price-Anderson Act.

Demonstrated security at U.S. Department of Energy nuclear facilities is also a serious concern. According to a former top DOE security official, contract guard forces have failed more than half of the time to protect DOE nuclear facilities in mock "force-on-force" exercises. The blanket indemnity granted to DOE contractors by Price Anderson, even in cases of willful misconduct and gross negligence, runs counter to the goal of comprehensive security at DOE nuclear facilities. The federal government should not provide disincentives to safety through the Price-Anderson Act that undermine national security and place workers and the general public at greater potential risk.

Again, we are deeply concerned by the prospect of Price-Anderson reauthorization being included in the Senate energy bill. Since the Price-Anderson Act does not expire until August 2002 and includes a grandfathering clause for existing reactors (including those which subsequently seek relicensing) and DOE contracts already in place, we strongly recommend at least delaying consideration of its reauthorization until the above-mentioned issues can be satisfactorily resolved through a full legislative process of hearings, committee mark-ups, and thorough debate.

We would be happy to discuss this matter with you further. Please feel free to contact any of the organizations listed at the top of this letter.